About Your Credit Score

Before they decide on the terms of your mortgage loan, lenders want to know two things about you: your ability to repay the loan, and your willingness to repay the loan. To assess your ability to pay back the loan, lenders assess your debt-to-income ratio. To assess your willingness to repay the mortgage loan, they look at your credit score.

Fair Isaac and Company formulated the first FICO score to assess creditworthines. You can learn more about FICO here.

Your credit score comes from your history of repayment. They don't consider income or personal characteristics. These scores were invented specifically for this reason. Credit scoring was envisioned as a way to assess a borrower's willingness to pay without considering any other demographic factors.

Deliquencies, derogatory payment behavior, debt level, length of credit history, types of credit and the number of inquiries are all calculated into credit scoring. Your score considers positive and negative items in your credit report. Late payments lower your score, but consistently making future payments on time will improve your score.

Your credit report should have at least one account which has been open for six months or more, and at least one account that has been updated in the past six months for you to get a credit score. This payment history ensures that there is enough information in your credit to calculate a score. Should you not meet the minimum criteria for getting a score, you might need to establish your credit history prior to applying for a mortgage.